Sunday, September 28, 2008

What's so wrong with socialism?

Let me start off, as I often do, by reminding everyone that I do not consider myself an expert on politics, history or economics. But what's so wrong with socialism? It seems every political season an ambitious Mr Smith-type freshman lawmaker puts forward some kind of government-sponsored universal health care proposal which is almost immediately swatted down with the rebuke that it is too much like socialism. And then the debate is over. No further discussion about the benefits of such a system, no discussion even of the challenges, because the thought of a government-sponsored health care system is too repugnant.

As Michael Moore points out in Sicko (a flawed movie, but a good first step in a debate that never really took place), there are plenty of socialized programs that work out just fine. Public libraries, for example, are a fine use of tax dollars. Fire departments do not significantly erode my chances to achieve the American Dream, although if my dream was to start a for-profit emergency fire service, I suppose it might. Even the US Post Office, while being relatively self-sufficient, does not operate on a for-profit model. It still amazes me that I can write a letter and pay someone forty-two cents to take it all the way across the country for me.

My point here isn't really about health care. I would love to have universal health care, but I understand that the reason we do not is because the medical industry is too big to just shut down. And here's where my lack of education of the process may become clear, but it might even be terrible for our economy if this massive money-machine were to be dismantled. I maintain that, from an operational perspective, the thought of socialized health care is perfectly acceptable - I understand that taxes would be significantly increased, but in my mind that simply replaces the fee for individual health care and removes the paperwork and hassle. But all of this is not the point. My point is banks. And again, my ignorance is on display. We, as Americans, now own parts of Fannie Mae and Freddie Mac. We now own parts of AIG. I do not understand the whole process, but accept the interpretation that if the government had not stepped in then the economy would have frozen up. So I am glad that the government has taken the initiative (if you can call it that) and done its job of protecting its citizens from economic harm. But what has been done (please correct me if I am wrong) is socialize these financial institutions. Not the good parts, not the profits of course - it would be wrong to penalize capitalism and investment for its successes - but from failure. So we own the debts of these financial giants. In a way, this reminds me of the story of the Prodigal Son, which always bothered me. As a story of forgiveness, I'm sure it's fine, but as an economic model, it's shit.

So now, I have to wonder what will happen. I'm an optomist (probably my general ignorance again) so I think that the economy will level off eventually and even climb up again. And what will happen to the money? What will happen to our shares of Wall St? I don't doubt that, if our economy does not knock us back to the stone age, the government will recover much, if not all, of its investment. But will that be over? Will we actually share the profits of these banks? Maybe that's too much like socialism for some people, but it seems like the bad part of socialism has already happened - we had may as well enjoy the benefits!

I certainly welcome comments and corrections, but since I have already admitted my lack of expertise here, please be kind in your comments.

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